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Chapter 2

# Chapter 2 - The Unemployment Rate is the ratio of the...

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Chapter 2 GDP; the sum of the value of all the final goods. Intermediate goods are not counted in the calculation, as they would then be counted twice, causing a skewed number. Per Capita means “per head.” It’s a good concept to keep track of how we’re doing, but it doesn’t actually tell us how much the average person has, since there are a few people who are way better off than most. Y=GDP=C+I+G+NetX C=Consumption I=Investment G=Government Expenditures NetX= (X-I) Nominal GDP; GDP in current dollars. Real GDP; GDP in constant dollars. NGDP/RGDP= GDP Deflator Unemployment is a big problem. High unemployment results in less spending which results in even higher unemployment. L (Labor Force) = N (Employment) + U (Unemployment)
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Unformatted text preview: The Unemployment Rate is the ratio of the number of people who are unemployed to the number of people in the labor force: u= U/L Inflation affects the value of money, decreasing the efficacy of the money people save and owe. Selling bonds for investment purposes is not bad, but selling bonds and using the proceeds for pure consumption, that’s bad, bad, bad. When the value of the dollar starts to rise, we import more goods, and net export goes down, causing employment to go down. C= C +MPC (Y-T) MPC+MPS=1 In a good year, MPC=.94… In bad years MPC can equal .98 out of every dollar. I= I – dr Multiplier= 1/MPS= 1/(1-MPC)...
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